Question: 1.Why should ethics play an important role in supply chain management and how does corporate responsibility count versus profitability to shareholders? 2.What should a manufacturer do to setup and build an ethical and sustainable supply chain program as part of their organization?

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
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Manufacturers today face increasingly complex challenges, from economic instability to compliance pressures and heightened global competition. Most recently, they have come under scrutiny with regard to their ethical and sustainability practices, with consumers paying closer attention to how organizations source, manufacture and distribute goods.  According to a recent Accenture survey, more than half of consumers would pay more for products designed to be reused or recycled, bringing sustainable practices to the forefront.

In response to this shift, organizations have taken a number of steps to change the way they operate, such as embracing greener, more sustainable ways of working, and even expanding their focus on deploying corporate social responsibility initiatives. They’re shining the spotlight specifically on ethical sourcing. As in many industry sectors, technology has a major role to play in developing more ethical and responsible sourcing of parts or raw materials. It enables organizations to ensure transparency of information about all suppliers, through systems that capture and manage information across the supply chain i.e. use of blockchain.

For example, if a fire breaks out in a vehicle and the source is found to be the wire harness, a potential government-mandated recall might require the identity of all suppliers who were involved with its manufacture. If poor-quality gold was used in the connectors fitted to the wire harness, evidence in the blockchain can immediately identify where the gold came from — even the mine from which it originated. While blockchain stands to transform ethical sourcing practices, organizations are still at the early stages of learning about the technology and how it can impact the way they do business. It will be a few years before blockchain finds its way into every business process.

Here, then, are six steps manufacturers should take to successfully build ethical and sustainable supply chains.

  1. Identify Trustworthy Suppliers
  2. Digitize Your Supply Chain
  3. Secure Trading-Partner Relationships
  4. Monitor Shipment Provenance
  5. Manage Supplier Communities
  6. Gather Ethical Insights

For many organizations, monitoring the performance of trading partners and truly understanding the ethical “pulse” of supply chains remains a key challenge. To this end, advanced analytics, artificial intelligence and machine learning tools offer a helpful solution, providing a wealth of insights into day-to-day processes. In fact, AI stands to transform future operations, providing a means of ensuring that supply chains meet ethical standards, and applying measurable outcomes that can be applied to every trading partner across the chain. 

Question:

1.Why should ethics play an important role in supply chain management and how does corporate responsibility count versus profitability to shareholders?

2.What should a manufacturer do to setup and build an ethical and sustainable supply chain program as part of their organization?

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